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Eileen Shulock, VP eCommerce at Kirna Zabête
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All posts with the tag False Positives

( This article first appeared as a guest post on the I Love Fashion Retail blog )

Fashion retailers, especially those selling luxury and high-end goods, are often targeted by fraudsters. While the rollout of pin-and-chip credit cards is expected to reduce fraud rates in brick-and-mortar stores across the US, this technology is not effective in online transactions. As they are liable for fraud, eCommerce merchants naturally strive to avoid accepting fraudulent transactions and incurring the related chargebacks. Regrettably, this leads to risk-averse policies that result in good customers being rejected along with fraudsters. We have seen many cases of retailers missing out on expansion opportunities due to fear of fraud.

Riskified has the pleasure of partnering with some great fashion brands and retailers, including Ssense, Far Fetch, Vestiaire Collective, Burton, Portero Luxury, and Ghurka, to name a few. In this post, we share best practices for online fashion retailers looking to avoid fraud without turning away good customers.

 

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Managing eCommerce fraud operations is no easy task; whether hiring, training, and managing a manual review team, monitoring approval rates, and optimizing internal rules, a fraud manager’s attention is often drawn to many places at once. With so much on their plate at any given time, it’s easy to understand why merchants are drawn to “silver bullet” solutions to manage and prevent chargebacks.

One “solution” to chargebacks often utilized by merchants is fraud prevention blacklists; when hit with a chargeback, all the transaction details are simply added to a blacklist, so that the next time an order is placed from the same IP address or using the same email, the transaction is automatically declined. While they may seem like a great way to streamline internal operations and to prevent future fraud, blacklists are in fact a misguided way to address chargebacks.

In using blacklists, you block not only fraudsters but also many good customers. Moreover, there are pretty basic methods fraudsters can use to “fool” your blacklists. In this post, I will explain why you should stop relying on blacklists for fraud prevention.

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AVS (Address Verification System) was designed to combat CNP (Card Not Present) fraud. The idea behind this system is that cross-referencing the numeric portions of the billing address provided by the buyer with the numeric portions of the billing address on file at the credit card issuer would enable merchants to verify that the buyer is the rightful cardholder.

Payment processors encourage merchants to set automatic AVS mismatch filters as an anti-fraud measure. However, many merchants who use these filters do not realize that full AVS match does not ensure a transaction isn’t fraudulent, and on the flipside, orders with AVS mismatches are often legitimate.

In this post, we will show why rejecting orders solely based on AVS information is a bad idea.

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